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Forsyth County, Georgia – Central to the Cumming medical office submarket, located at GA-400 and Buford Road, is the not-for-profit Northside Hospital – Forsyth. The hospital was acquired in 2002 from Georgia Baptist and expanded to a medical campus that currently includes the 304-bed hospital, a Women’s Center and an advanced surgery tower. There are five on-campus medical office buildings totaling 370,221 square feet, all nearly 100 percent occupied. A sixth building currently under construction, Northside Forsyth MOB V at 125,000 square feet, is expected to be delivered in March 2018. The one remaining suite in this facility is currently under a Letter of Intent.

The overall submarket totals 708,845 square feet in 21 medical office buildings. QuantumCRE tracks specialty built medical office buildings that are generally 9,500 square feet or larger. During the past four years there has been one new building delivered each year, the latest being Forsyth Physician Center, which opened Third Quarter 2017. This 91,500 square foot, off campus Class A medical building is 100 percent leased, the largest tenants being North Atlanta ENT & Allergy and Resurgens Orthopaedics. A phase II, 3 story building is planned on adjacent property.

During the past four years, overall vacancy rates have remained below 5 percent. The vacancy rate for Third Quarter 2017 is at 3.9 percent and expected to drop a percent point by First Quarter 2018. Physicians looking to acquire space will have to look at smaller office buildings for adaptive reuse and/or retail locations. There are two medical office buildings under construction to be completed in 2018, which may help on the supply side. Northside Forsyth MOB V and the Grady Dental Care medical office building at 935 Buford Road is currently marketing about 11,000 square feet of available space. QuantumCRE anticipates announcements of new construction in 2018 with completion dates in 2019.

Rental rates are only reported in 3 of the 21 properties averaging about $25.00 per square foot. With limited historical available space and properties not being actively marketed, there is no reliable source for comparing historical trends for quoted rental rates. Most recent transactions in the newest buildings are reporting lease rates of over $26.50 per square foot. For comparison at mid-year, the overall Metro Atlanta average quoted rate was $21.64 per square foot and North Fulton/Forsyth averaged $22.59. These rental rates along with continued demand and limited supply would support new construction.

For a complete report of supporting data and/or request for a market study, please give us a call oremailRichard L. Smith, Jr., CCIM. Quantum Commercial Real Estate can also provide full market research studies including available spaces, lease rates, operating expenses, sales comparable data, demographics, and tenant rosters on medical office buildings across the Southeast Region. Buy, build or lease, we work with healthcare professionals evaluating real estate options.

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Quantum Commercial Real Estate (QCRE) is a full service commercial real estate firm offering Brokerage, Development, Investment, and Management services. With years of experience in healthcare real estate related transactions and locations in North and South Atlanta, QCRE has the expertise to assist you. For more information and to discuss your needs with a Quantum Commercial Real Estate Representative, contact 770-462-2002 (North Atlanta Office), 770-486-8200 (South Atlanta Office), or visitQuantumCRE.com.

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The QuantumCRE Northside office is sponsoring the Commercial Real Estate Course Concepts Review for the Certified Commercial Investment Member (CCIM) Georgia Chapter. This course will help prepare CCIM members for the comprehensive exam. QCRE Associate, Richard Smith, Jr., will be teaching the User Decisions (leasing) module during the course. The course is for four weeks and students meet weekly on Tuesdays from 8:30-10:30am. Listed below are details on the course modules, dates, instructors, and location.

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In July 2017, Parkside Development Group in partnership with South-Tree Enterprises and Quantum Commercial Real Estate broke ground on a 40,000 square foot medical office building in Newnan, GA. Located next to Newnan Professional Center, Building A, and across the street from Piedmont Newnan Hospital, this site has great access to numerous medical facilities in the area and Interstate 85. Suites are available from 2,500 to 20,000 square feet and the building will be completed in the 2nd quarter of 2018.

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Adjacent to Piedmont Fayette Hospital is a new Class ‘A’ Medical Office Building with space available. The two-story building is 30,000 square feet and currently has three tenants including Pain Consultants of Atlanta, Atlanta Vascular Specialists, and Dr. Dave C. Lee (Dentist). With generous TI allowances and no hospital restrictions, this is a flexible and convenient location for a tenant looking for 2,000-11,000 square feet on the first floor. The building was completed in June 2017 in partnership with Parkside Development Group, South-Tree Enterprises, and Quantum Commercial Real Estate.

This facility was developed in partnership with Parkside Development Group, South-Tree Enterprises, and Quantum Commercial Real Estate.

Contact Paul Schwinne or David A. Strickland at 770-486-8200 in the south Atlanta office, and Richard Smith, Jr. at 770-462-2002 in the north Atlanta office for information on their tenant representation, general brokerage, development, investment, and management services.

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Metro Atlanta – Atlanta’s specialty use medical office building market is alive and well. The market encompasses roughly 721 multi and single-tenant medical office buildings, totaling over 24.1 million square feet. These medical office buildings, both “on” and “off” hospital campuses, are specialty built for the medical community. Non-primary use medical office buildings including traditional office buildings, business parks, and the growing retail sector are not included in our analysis. While accommodating some medical uses, these properties do not provide the referral basis and services of a professionally run medical building. This pseudo-market could be several million square feet; a fraction of the total amount of vacant retail and primary use office space in Metro Atlanta.

There are ten primary areas of medical space in Atlanta, the largest being the Northwest Atlanta submarket with over 4.3 million square feet. The other five largest submarkets include Central Perimeter, North Fulton, Northeast, Northlake, and South Atlanta, all with over 3 million square feet each. Interestingly the Urban Corridor including Buckhead, Midtown and Downtown contain less than 2.5 million square feet total (not including the on-campus medical office buildings of Piedmont Atlanta Hospital totaling approximately 900,000 square feet). This very densely populated corridor in terms of employers and households may be underserved by the medical community. We anticipate a large medical office building to be announced by years end.

The first half of 2017 was active with new medical office facilities being completed. Through mid-year 2017 there were 5 new medical office buildings delivered totaling 112,877 square feet; over 100,000 square feet was pre-leased at approximately 92% occupancy. Rental rate information has been withheld, however, our market research indicates rates of approximately $24.00 per square foot gross. The most notable deliveries include 738 Old Norcross Road, 17,000 SF located near Gwinnett Medical; 1233 Highway 54, 30,000 SF located contiguous to Piedmont Fayette Hospital and; Locust Grove Physician Center, 40,000 SF in the Southeast, I-75 corridor. We anticipate several deliveries by year end 2017 including the 91,500 SF Forsyth Physicians Center, off-campus of Forsyth Northside Hospital, at 100% preleased at quoted rates of more than $30.00 per square foot, gross.

Absorption, the net difference in the amount of space occupied between two periods, was positive through mid-year 2017. In fact, the net 463,323 square feet of positive absorption was the greatest amount for the first half year for the past 10 years. With current market demand and anticipated pre-leased deliveries, Quantum Commercial Real Estate (QCRE) anticipates year-end 2017 absorption to surpass 750,000 square feet, topping the boom years prior to 2008 and subsequent meltdown of all commercial real estate. The South Atlanta submarket had the overall greatest absorption levels of over 137,000 square feet through mid-year followed by Northwest and North Fulton at over 83,000 square feet each. One market, the Central Perimeter including medical office buildings at Pill Hill, did report negative absorption of just under -3,300 square feet.

The current overall vacancy rates for medical office buildings at 11.1% continue to decline. Down by nearly 2 percentage points from 2015, these rates are the lowest in at least the past 10 years. With continued positive absorption possibly outpacing deliveries, QCRE predicts further decline to about 10.7% by years end. As rent rolls continue to improve, Landlords are becoming less inclined to offer concessions of just a few years ago. Lease concessions in terms of free rent and improvement allowances are becoming more difficult to negotiate. Not all markets are equally healthy. The highest vacancy rate at over 17.2% is in the 3.2 million square feet Northeast Atlanta Market with an available inventory of over a half million square feet, also the largest amount of vacant square feet of any submarket. Conversely, the Midtown and Downtown Submarkets have vacancy rates at a very unhealthy 1%, thus limiting availability, options, and concessions. As population and employment density continue to grow in this corridor, we anticipate new medical options in non-traditional medical buildings.

Short-term, rents have been relatively flat for the past 6 quarters. At midyear, 2017 quoted rental rates averaged $21.64 per square foot. The most expensive being Downtown at $34.75 per square foot followed by Central Perimeter and Buckhead at $27.67 and $26.78 per square foot respectively. These rates are an average of both modified gross and full service. Full-service rates will include base rent and expenses while modified gross rates are net of expense with the tenant paying separately for utilities, janitorial, taxes, building insurance, and common areas (TI-CAM), which can add $7.00 to $9.00 per square foot to the lease rate. Be mindful to compare like kind quoted rates. Many of Atlanta’s largest medical office buildings are quoting over $30.00 per square foot gross and/or gross equivalent after adding expenses. Mid-term, rents are up by $1.40 per square foot from 2012, however, long-term, are still down from 2008 highs of over $22.50 per square foot. QCRE predicts average rates to match 2008 highs in 2018.

For a complete report of supporting data and/or request for a market study, please give us a call or email Richard L. Smith, Jr., CCIM. Quantum Commercial Real Estate can also provide full market research studies including available spaces, lease rates, operating expenses, sales comparable data, demographics, and tenant rosters on medical office buildings across the Southeast Region. Buy, build or lease, we work with healthcare professionals evaluating real estate options.

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Quantum Commercial Real Estate (QCRE) is a full service commercial real estate firm offering Brokerage, Development, Investment, and Management services. With years of experience in healthcare real estate related transactions and locations in North and South Atlanta, QCRE has the expertise to assist you. For more information and to discuss your needs with a Quantum Commercial Real Estate Representative, contact 770-462-2002 (North Atlanta Office), 770-486-8200 (South Atlanta Office), or visit QuantumCRE.com.

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Quantum Commercial Real Estate welcomes Scott Markham to the Quantum Team. Scott joins Richard Smith, Jr. in the QuantumCRE North Perimeter-Atlanta brokerage office. Scott has a strong background in sales and customer service and he is currently pursuing his real estate license. In his role as Research Associate, Scott will provide research support and assist with communications and building client relationships. Scott is a native of Atlanta and a recent graduate from the University of Mississippi where he received his Bachelor of Business Administration degree in Marketing. When not working to find ideal properties for clients, he enjoys supporting his Ole Miss Rebels, Manchester United FC, and expanding his interest in automobiles.

How often does a physician make money on real estate that also serves as the location of a successful practice? Advanced Dermatology has multiple locations in Metro Atlanta but wanted to concentrate on patient care on the westside of Atlanta. Dr. Agha, owner of Advanced Dermatology and a 3,528 square foot, free-standing medical office building in Piedmont Commons was looking for options. This East Cobb office was outside Dr. Agha’s core geographic area and he needed an exit strategy.

Situation:

Understanding the general commercial real estate market conditions, demographics and specific property values was critical in evaluating the options for Dr. Agha and making the decision to sell. Dr. Agha engaged QuantumCRE for assistance in listing the property for sale. Piedmont Commons is strategically located in a corridor of “Suburban Periphery” with a high demand for medical specialties but few options for a physician to own their building. Recent property sales comparables indicated a potential value that could more than double Dr. Agha’s investment dollars.

The existing medical use also added potential value to prospective medical users looking to save money on startup costs including the build-out and furniture, fixtures, and equipment. QuantumCRE focused on reaching out to their existing database of medical clients and canvassing successful practices in North Atlanta that potentially could take advantage of the existing build-out.

Results:

The property sold to a dental group within six months of QuantumCRE starting the listing assignment. “We had multiple showings during the first month. After several competitive offers, the property closed. We took the cash and reinvested in our other locations,” says Dr. Agha. We negotiated a sales price that was close to our initial estimate of value in a timeline that exposed the property to multiple users. Dr. Agha adds that “Richard did a great job and we look forward to finding more opportunities to work with QuantumCRE.”

Action:

Are you looking for commercial real estate solutions? QuantumCRE can provide full market research studies including available spaces, lease rates, operating expenses, sales comparables and tenant rosters on medical office buildings in Atlanta and across the Southeast. Call/Text/Email to gain immediate access to our team of professionals.

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QCRE is sponsoring a Commercial Real Estate Prep Course for the Certified Commercial Investment Member (CCIM) Georgia Chapter. This course will help prepare members for the CCIM comprehensive exam. The prep course will be held on the dates below at the QCRE Northside Office. QCRE Associate, Richard Smith, Jr., will be teaching the Buy vs. Lease module during the course.

Dates and Time:Tuesday, September 20th, 8:30am-10:30amTuesday, October 4th, 8:30am-10:30amTuesday, October 11th, 8:30am-10:30amTuesday, October 18th, 8:30am-10:30am

Registration is required to attend and is open to CCIM chapter members only. September 16th is the last day for registration. The course is a study group format consisting of four modules matching the four core courses. Each module is to be completed before class (reading and homework) including the first session on September 20th.